Phillips 66 2Q26 Earnings Preview: Anticipating Upside EPS Print on Across-the-Board Strength

Research evidence excerpt

Phillips 66 2Q26 Earnings Preview: Anticipating Upside EPS Print on Across-the-Board Strength

.39 7.59 5.01

Corridor capture. We forecast a consolidated capture rate of ~94%, normalizing Q3 2.53 6.89 5.05

Q4 2.47 4.51 3.98

from the extraordinary 138% posted in 1Q26 that was driven by one-off FY 6.49 19.49 18.14

commercial optimization (Bakken-to-Bayway movements via Jones Act waivers,

elevated freight capture, and favorable product differentials) and now offset by Style Exposure

backwardation impacts. We expect capture to be fairly consistent across regions,

with Atlantic Basin/Europe and Gulf Coast carrying a relative tailwind versus West

Coast and Central Corridor. On freight, PSX continues to see upside to the indicator

given the time-charters locked in over the past two years amid an elevated freight

market. Narrowing jet and diesel spreads should further benefit the Atlantic Basin

and Gulf Coast.

In Chemicals, full-chain ethylene margins jumped significantly in May before

coming down in June, and PSX views the margin floor as structurally higher (~5-10

cents/lb) given the elimination of the ~5c-6c/lb advantaged naphtha feedstock

China previously derived from deeply discounted crude. With ~80% of CPChem

capacity on the US Gulf Coast running at high rates on advantaged ethane, and a

contract mix that is roughly 50% spot / 50% term (capturing higher pricing but not

entirely in line with spot), we model Chemicals pre-tax earnings of $390 MM (net

to PSX, vs. STe $367 MM). Ethane is expected to remain abundant, a strong benefit

to CPChem. In Renewable Diesel, the indicator moved substantially, reflecting a

structural shift in the market driven by a higher RVO and constructive federal and

California regulatory developments. Rodeo is running above nameplate capacity,